Foreign Trade Zone Overview

Transcription

1 Foreign Trade Zone Overview FTZ Networks, Inc. Foreign Trade Zone No. 77, Site Delp Street Memphis, Tennessee Direct

2 What is a Foreign-Trade Zone? A Secure Area Located in or near a Port of Entry Legally Outside the U.S. Customs Territory In a Zone Merchandise may be assembled, exhibited, cleaned, manipulated, manufactured, mixed, processed, relabeled, repackaged, repaired, salvaged, sampled, stored, tested, displayed, & destroyed Retail Trade is Prohibited

3 Establishment of Foreign-Trade Zones To encourage and expedite U.S. participation in international trade To foster dealing in foreign goods imported not only for domestic consumption but also for export after combining with domestic goods To defer payment of duties only until goods are entered into the commerce of the U.S.

4 FTZ - A Trade Program Concept unsuccessfully introduced in the U.S. Senate in 1894 Successfully reintroduced in 1934 as part of The New Deal H.R. 9322: to provide for the establishment, operation, and maintenance of FTZs in ports of entry of the United States, to expedite and encourage foreign commerce.

5 Types of Foreign-Trade Zones General Purpose Zone Often an industrial park or port complex whose facilities are available for use by the general public 1 GPZ may be comprised of multiple sites Serves as the sponsoring zone for the subzone Subzone Normally single-purpose sites when the operations cannot feasibly be moved to, or accommodated in a general purpose zone; often manufacturing plants or large distribution centers

6 Current Statistics Over 250 Approved General Purpose Zone Projects At least one in every state plus Puerto Rico Over 500 Approved Subzones Approximately 90% of activity (measured by value) in the FTZ program takes place in subzones. In excess of $300 billion (in value) of merchandise is received at FTZs annually.

7 What Benefits do Zones Offer? Increased flexibility with just-in-time delivery, quotas and reduced Customs delays. Duty reduction/elimination on: Manufacturing in the U.S. and selling domestically and internationally. Duty Inversion, where the finished product has a lower duty rate than the individual components. Duty-deferral until merchandise is shipped from the Zone into Customs territory. Merchandise may be held in a Zone indefinitely. Ability to hold most merchandise subject to quotas until the quota opens and/or the ability to bring such goods into the Zone and subsequently re-export them.

8 What Benefits do Zones Offer? Merchandise Processing Fees may be reduced by filing weekly entries. Brokerage costs may be reduced by consolidating multiple entries into fewer entries or into a single entry. Certain state, local & federal taxes are eliminated on foreign goods or material brought into the Zone Transportation savings by having ability to change mode-of-transportation from premium to standard I.e.- expensive (with high duty rate/cost), heavy product moving from air to ocean by building up inventory.

9 What can you do in an FTZ? A facility where goods may be: received stored manipulated manufactured exhibited examined tested calibrated destroyed exported repacked assembled mixed with domestic goods title transferred

10 Is an FTZ Right for You? IF YOU ANSWER YES TO ANY OF THE FOLLOWING, THEN LOCATING IN AN FTZ CAN HELP. Do you manufacture, assemble or process with imports? Do you regularly pay more than $485 per week in merchandise processing fees? Do you scrap, reject, destroy, waste, or return some of your imports? Do you export previously imported materials?

11 Duty Elimination Inbound Goods Receiving Process Quality Control May be blanket or single transaction Scrapped Duty Free

12 Duty Elimination Imported Product A Potentially Dutiable Assembled New Product B Exported Duty Free Import Duty Free EXPORT

13 Duty Elimination Imported Product A Potentially Dutiable or Import Duty Free EXPORT Duty Free

14 Inverted Duty Rate Component B 12% Duty Component C 8% Duty Component C 5% Duty Component A 10% Duty Component B 5% Duty Component A 5% Duty

15 Merchandise Process Fees Companies outside an FTZ pay a.3464% merchandise fee per shipment. Minimum fee is $25.00 maximum fee $ The maximum MPF paid is reached with a shipment valued at $140, In an FTZ the company lumps all shipments for a week into one filing resulting in a $485.00/week maximum fee. 15 shipments/week $485 x 15 = MPF $7275 Shipments into commerce, NO FTZ $363,750/year 15 shipments/week 1 entry filed at end of week. MPF $485 $24,250/year Shipments into commerce with weekly entry

16 Deferred Duty Product A Duty Owed Product A Duty Paid

17 Benefit & Duty Deferral Explanation Uncleared Merchandise Cleared Merchandise Distribution Center/Warehouse Shipping Duty paid on merchandise at time of clearance at Customs port of entry BEFORE FTZ OPERATIONS

18 Benefit & Duty Deferral Explanation Uncleared Merchandise Cleared Merchandise Distribution Center/Warehouse Formerly duty-paid merchandise being shipped from facility Foreign merchandise admitted into FTZ; no duties paid at Customs port of entry. Shipping dutypaid merchandise using FIFO inventory record-keeping; no duties paid at point of shipment either. DURING FIRST INVENTORY TURN OF ACTIVE FTZ OPERATIONS

19 Benefit & Duty Deferral Explanation Uncleared Merchandise Distribution Center/Warehouse Cleared Merchandise Customs entry now made on merchandise which was admitted into the Zone. Duty paid at this point. Distribution center full of uncleared merchandise now. AFTER FIRST INVENTORY TURN

20 Other Benefits Lower administrative costs. Lower security and insurance costs. No time constraints on storage. Shorter transit time direct delivery. Improved inventory control. Informed customs officer

21 Summary Significant reduction in MPFs (Merchandise processing fees) Increased flexibility with just-in-time delivery, quotas and reduced Customs delays. Duty reduction/elimination on: manufacturing in the U.S. and selling domestically. Duty Inversion - where the "set" has a lower duty rate than the individual pieces. Duty-deferral until merchandise is shipped from the Zone into Customs territory. Merchandise may be held in a Zone indefinitely. Ability to hold most merchandise subject to quotas until the quota opens and/or the ability to bring such goods into the Zone and subsequently re-export them.

22 Thank You FTZ Networks, Inc. Foreign Trade Zone No. 77, Site Delp Street Memphis, Tennessee Direct